The U.S. and its allies haven't aimed sanctions at Russia's energy exports yet, but buyers are already shying away from the country's crude even as prices soar.
Call it a “buyers strike” or “self-sanctioning,” but Russian crude is being shunned in the physical market even as a scramble for barrels sends oil futures to their highest levels in years.
“The current central bank sanctions and selective SWIFT action is causing major risk aversion by key market participants,” said Helima Croft, head of global commodity strategy at RBC Capital Markets, in a Thursday note. Nevertheless, energy companies, trading houses, shipping companies, and banks have all backed away from the Russian energy business, Croft noted, adding that the country’s “already staggering” export losses could hit 3 million to 4 million barrels a day if Western powers follow through and impose the sort of energy-focused “secondary sanctions” that were aimed at Iran.News reports have noted the struggle to clear Russian crude in the physical market.
The premium for May Brent over the contract for delivery nine months later temporarily topped $20 a barrel, a level not seen since the 1990s, noted Edoardo Campanella, an economist at UniCredit Bank in Milan.
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